On June 30, 2016, the USEPA published a proposed rule laying out its Clean Energy Incentive Program (CEIP), found in the Federal Register, Vol. 81, No. 126. CEIP is a voluntary early action program within the federal Clean Power Plan of 2015 (CPP), regulating CO2 emissions from existing power plants. To provide greater compliance flexibility, including having a pool of allowances for subject power plants to buy to comply, the USEPA would like to have this available when CPP goes into effect in 2022.

Implementation of CPP has been hobbled by a stay put on it by the US Supreme Court in February 2016. While some have argued that all compliance deadlines must be postponed because of the stay, the USEPA is continuing efforts for full implementation of all aspects of the Plan, including the proposed CEIP program.

The publication contains proposed guidelines for states that wish to participate in CEIP, including procedures for states to distribute allowances or to issue emission reduction credits (ERCs) for approved energy efficiency (in low-income communities) and zero-emitting renewable energy projects (in all communities). The proposed rule lists solar, geothermal, hydro, and wind as eligible renewable projects; it does call for comments on whether it should expand the definition to include CHP and nuclear. An entity which has successfully implemented an approved project by 2020 may get matching ERCs from the USEPA and can sell or transfer the ERCs or allowances to subject power plants to comply with their CO2 emission reduction goals from CPP. The USEPA is limiting the pool to 300 million short tons of CO2 emission allowances to distribute, based on its estimation that this will be the level that subject power plants will reduce CO2 emissions as part of CPP. These allowances will be distributed to states based on its share of the estimated reduction.

The proposed rule contains administrative requirements for states that choose to participate in the CEIP and the requirements for energy projects to meet CEIP eligibility. In general, a renewable energy project will receive 2 ERCs for every 2 MWh of renewable power generated. This ratio doubles for projects in low-income communities. For a project to be eligible to obtain ERCs, it must be implemented in a state that is participating in CEIP, and has demonstrated that it is replacing electricity production from a subject power plant in 2020 and 2021.

CCES has the technical experts to help you plan, design, select, and fully implement an energy efficiency or renewable energy project and help you obtain ERCs under this program, when it comes into force. We can maximize not only the revenue you can make selling ERCs under this program, but also maximize the financial benefits of your projects for your bottom line, as well. Contact us today for a free, no-obligation discussion at karell@CCESworld.com or at 914-584-6720.